Not only are we looking at fraud and self-dealing by the largest banks in the West.

Not only are we looking at interest rate manipulation that deprives hundreds of trillions of dollars worth of interest-sensitive instruments of money they deserved to receive. (See our LIBOR backgrounder for more.)

We now have some evidence that the Bank of England — the UK central bank — had knowledge of the LIBOR Lies, and approved Barklays' artificially lowered submissions as a solution for Barklays.

If so, the Bank of England knew about it all. From ProPublica (my emphasis and paragraphing):

In October 2008, with the financial crisis at full bore, Barclays was again on the higher end of rate submissions. That month, according to filings, a senior Barclays manager spoke with a Bank of England official about Libor rates, and the idea that they might be artificially low.

Hearing of this conversation, other Barclays managers “formed the understanding” that the Bank of England wanted Barclays to lower its submissions.

This week, Barclays released an emailconfirming the conversation was between Diamond and Bank of England’s deputy governor Paul Tucker. It was another Barclays manager, Jerry del Missier, who determined what he thought Tucker’s comments meant, Barclays says.

In that paper, Berkowitz tests alternative methods of calculating LIBOR rates specifically because the Fed has already seen three examples of misreporting from one bank in early 1996. While he writes those incidents off as being "undoubtedly...unintentionally misreported," the composition of a paper to prevent against such errors suggests a great deal of interest from the Fed in this subject. ...

While Rabinowitz's paper does not imply that banks had been colluding to manipulate rates at the time it was written, it suggests that the Fed was already be concerned about the effects of inaccurate reporting by banks about their lending practices ten years before the financial crisis.

If the Fed was alerted in the late 1990s, they had to be paying attention. Do these Big Boy bankers talk to each other? I'm guessing once a month at least — at St. Andrews.

Just keep your eyes open. This hasn't begun to blow. (And if it never does, that will be even worse news.)

Not only are we looking at fraud and self-dealing by the largest banks in the West.

Not only are we looking at interest rate manipulation that deprives hundreds of trillions of dollars worth of interest-sensitive instruments of money they deserved to receive. (See our LIBOR backgrounder for more.)

We now have some evidence that the Bank of England — the UK central bank — had knowledge of the LIBOR Lies, and approved Barklays' artificially lowered submissions as a solution for Barklays.

If so, the Bank of England knew about it all. From ProPublica (my emphasis and paragraphing):

In October 2008, with the financial crisis at full bore, Barclays was again on the higher end of rate submissions. That month, according to filings, a senior Barclays manager spoke with a Bank of England official about Libor rates, and the idea that they might be artificially low.

Hearing of this conversation, other Barclays managers “formed the understanding” that the Bank of England wanted Barclays to lower its submissions.

This week, Barclays released an emailconfirming the conversation was between Diamond and Bank of England’s deputy governor Paul Tucker. It was another Barclays manager, Jerry del Missier, who determined what he thought Tucker’s comments meant, Barclays says.

In that paper, Berkowitz tests alternative methods of calculating LIBOR rates specifically because the Fed has already seen three examples of misreporting from one bank in early 1996. While he writes those incidents off as being "undoubtedly...unintentionally misreported," the composition of a paper to prevent against such errors suggests a great deal of interest from the Fed in this subject. ...

While Rabinowitz's paper does not imply that banks had been colluding to manipulate rates at the time it was written, it suggests that the Fed was already be concerned about the effects of inaccurate reporting by banks about their lending practices ten years before the financial crisis.

If the Fed was alerted in the late 1990s, they had to be paying attention. Do these Big Boy bankers talk to each other? I'm guessing once a month at least — at St. Andrews.

Just keep your eyes open. This hasn't begun to blow. (And if it never does, that will be even worse news.)

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